Lessons Learned from Penn State

We all have read with some degree of shock, horror and dismay the recent reports of alleged child sexual abuse that have been attributed to a former defensive coordinator and football coach, Jerry Sandusky, at Penn State University.  The reputation of a once-storied college football program cited as a pantheon within college football circles for its squeaky clean image as well as the reputation of the university it represents have been called into question.

Although reports concerning these incidents continue to evolve, they raise interesting questions of compliance and ethics that may be instructive in a broader context.

When people speak of "compliance," they often examine the factual situation and apply the applicable law, regulation or company policy to determine the appropriate action.  In a simple context, compliance can be viewed as primarily a rules-based function.

Yet, as the Penn State case reminds us, mere compliance with the law is often not enough.  Compliance is distinct from ethics.  This is one of the key messages that underscored the development of our organization, The Compliance and Ethics Forum for Life Insurers.

Concepts of "ethics" and "ethical behavior" are value-based and principles driven.  Acting in an ethical manner often requires examining other value-based concepts to drive behavior that would go beyond basic compliance.

The more we read about the Penn State incidents, the more the distinctions between these concepts come to the fore.

The state of Pennsylvania maintains a law that requires an affirmative requirement (under identified circumstances) to report suspected child abuse.

In this incident, Penn State's well renowned football coach Joe Paterno, allegedly met the requirements of his compliance obligation under this law to report allegations of suspected child abuse to his superiors at Penn State University.  And though one could argue that Coach Paterno met his compliance obligation, did he or others who allegedly became aware of such behavior act ethically?

In other words, is there a moral obligation that exists when certain factual circumstances are presented to consider actions that go beyond mere compliance with the law in a quest to "do the right thing" and act ethically?  Many observers of the incidents at Penn State would suggest that while compliance obligations may have been met, ethical standards were not.

The lessons of the Penn State incident have universal application.

Life insurers spend hundreds of thousands and, in some cases, millions of dollars to raise awareness of their brands and to implement compliance and ethics programs designed to protect their corporate identity and reputation in the marketplace.  Yet, as the Penn State incident points out clearly, it only takes a short period of time to tarnish, if not destroy, a well-established institutional reputation that may have been developed over decades.

So what are some lessons to be learned from these developments at Penn State?

• Mere compliance with the law may not be enough.  Circumstances often require taking appropriate action that may exceed the basic requirements of law.
   
• Well-built reputations can be destroyed in an instant.  Potential damage can be mitigated by prompt reporting and appropriate actions in response to questionable incidents.
   
• Observers of questionable actions are encouraged to report these incidents internally for further review within their respective organizations to avoid potential damage to the reputation of the organization or an entire industry..

We, as life insurance industry compliance and ethics professionals, have an obligation to be ever vigilant of the reputations of the institutions we serve.  Attendant with that obligation is the ability to think clearly, assess questionable circumstances thoughtfully, report inappropriate activities to those who are in a position to act with the authority to investigate these incidents thoroughly and, when appropriate, consider doing more than mere compliance with the law but have the courage to "do the right thing" and act ethically in a manner that will reflect favorably on yourself, your personal values and the values of the institutions you serve.